USA 529 plan room and board for live at home student

[Bornandraised]

My son lived on campus for 2 years and is now living at home. I understand we can charge him room and board and reimburse ourselves from the 529 account, up to the limit for room and board expenses set by his school. What is a reasonable amount to charge, what type of receipts do you need and do we then have to declare this room and board money as taxable income? Thank you

 

[smallbushelp]

Generally, income from any source is taxable. However, receiving reimbursement for your expenses is not taxable income. Determine what your expenses for maintaining the room for rent would be (this can include home owners insurance, mortgage interest, utilities, etc.) and use that as your rental amount. Any more than that would be taxable income. Refer to IRS Publication 527 for more information. Then you could get information from the IRS website about current per diem rates for meals. Doing that would not require that you keep receipts for money you spent on food.

Hope that helps.

 

[Bornandraised]

Thanks a lot! That is good to know about what/how I can charge for the room. For the per diem I looked at IRS Publication 1542 and for Erie county (Buffalo) in NY state is has $56 as the M&E per diem rate. Is this the amount I could use for each day he eats meals at home? It seems high, but perhaps that is the highest amount I could charge and I could charge something less than that if it is more reasonable? Thanks for your help

 

[smallbushelp]

Yes, you are correct. It is the highest amount you could use and you could certainly charge less. The per diem rates are set for people who are traveling away from home and typically it costs more to eat out than to eat at home. $56 per day may seem high but in some cities, the per diem is even more.

If I was helpful, I would appreciate a "Like."

 

[Bornandraised]

Thank you. This is good information for anyone who has a 529 and the student lives at home. There is very little info online about this topic so this is helpful.